Chris Morris argues that a Steam Box could make life difficult for Microsoft and Sony in the next couple years

With Nintendo having launched its next generation system and Microsoft and Sony waiting in the wings, plenty of analysts, observers and thumb-suckers are rubbing their worry beads about the impact of mobile and tablet gaming.

The PC is mentioned in passing, though few believe it will be a viable threat, due to the challenges that come with different hardware specifications. They also note that things like driver updates and the perception of more frequent component updates can be intimidating for the mass audience. But if the recent whispers of Valve's plans to launch a game hardware system prove true, that could upend the playing field.

Steam has always been a spoiler for the game industry's status quo. No one knows exactly how successful it is, thanks to Valve's airtight secrecy on sales numbers - but we know it's huge. And the company has always stayed out of the blood match for the living room.

According to an interview with Kotaku, Valve's about to get in the game, though - and that could have a major ripple effect on the next generation. Here are five ways a "Steam Box" could make things difficult for the next Xbox and PlayStation.

Fracturing the core

While Microsoft and Sony have learned the importance of catering to the mainstream audience, it's the core gamer who's still their bread and butter. Those are the players who regularly buy new titles. And more importantly, they're influencers whose opinions can help drive sales.

Historically, they've assigned their loyalty to a primary system, which has led to much of the Sony vs. Microsoft sniping that's so common in forums. But a large percentage of the core audience is unified in its love of PC gaming.

A Steam Box won't stop the core from buying an Xbox or PlayStation, but it could easily distract them away from those systems. And the entry of a third high-definition, AAA system (fourth, if you count Nintendo as part of this fight - though that company tends to exist in its own space), could further split the core gaming community - possibly severely impacting the revenue streams of Sony and Microsoft.

Day one PC releases

While AAA games still make it to PC these days, there's very often a delay. Piracy fears and a focus on the larger console audience make this somewhat understandable.

Should the Steam Box gather a notable installed base, however, that could cause publishers to rethink that strategy, to the delight of PC players. You still aren't likely to see console flagships like Halo, Uncharted or Gears of War on the PC in the near term, but you may not have to wait for things like Grand Theft Auto or Assassin's Creed.

Pricing shake up

"A Steam Box could hurt the retailer even more than competing console systems, since Valve is one of the biggest proponents of digital downloads in the industry"

Console game prices follow a pretty standard formula. During the first week or two of a release window, they're $60 - with retail discounts typically rare in that period. After that, the sales start - and generally it's gone from shelves within six months or so, unless it manages to become a breakthrough hit.

Steam has shown there's plenty of value in back catalog games. And it has been equally efficient at shaking up traditional pricing models, with its quarterly sales and surprise deep discounts. Publishers are already comfortable with the way things sell on Steam and know the benefits of those sorts of discounts - and there's no reason to think they'd become gun-shy about them now.

If a larger set of players gets used to them, that's going to put pressure on traditional retail stores to lower or be more flexible with their own pricing models.

DRM headaches

A Steam Box won't be quite the nirvana some gamers are dreaming of, however. The threat of piracy still looms - and publishers are going to be especially wary of it.

Ubisoft's DRM woes of earlier this year demonstrate that publishers still aren't exactly sure how to address the issue. And while the French company dropped its first stab at protecting itself, it's certain to come up with an alternative, as is every other publisher.

For most people, this won't be a major issue, but for some it could be a nightmare that could make consoles appealing again.

GameStop headaches

The console ecosystem extends far beyond Microsoft and Sony. GameStop might cause some grumbling among players, but it's a huge part of the system. A Steam Box could hurt the retailer even more than competing console systems, since Valve is one of the biggest proponents of digital downloads in the industry.

GameStop has plans in place already to sell things like Steam gift cards, but it's also planning its own digital distribution service to compete against Steam. If Valve has a foothold in the living room in addition to its domination of the field on the PC, that's going to force GameStop to get even more creative to remain relevant in the game industry of tomorrow.

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Looking forward to seeing what Valve come up with. I can certainly see a Steam Box being popular, but it will need plenty of support for streaming TV and movies if they really want to take over the living room.

Steam's DRM really is one of the best - take it from one who reads Scene release sites. Ubisoft, EA, whatever... None of them really beat the success rate of Steam's CEG .exe and custom trigger combination (Tom, you'll be pleased to know there's still no fully updated and working pirated copy of Shogun 2 :) ). By contrast, other forms of DRM all suffer great 0-Day cracking issues. There's even a custom .dll workaround for Battlefield 3 to avoid using Origin. Not great.

My point? If the Steambox does become a reality, we'll see far more publishers using Steamworks DRM. Now, for the above reasons, this is good. But it does mean that Valve really need to work on the activation/encryption and offline-play side of Steam. Midnight of release-day for big games, Steam chugs to a halt, and the servers are swimming in molasses, due to everything that goes on. And people still complain about the Offline mode not working properly.

Other things to note:

Where will EA be with all this? Their big in-house games aren't coming to Steam (no Crysis 3, no new Sim City, still no Syndicate). They're trying to leverage Origin. But if the Steambox boots through Linux and straight into Steam's Big Picture Mode, they're losing out.

Edited 1 times. Last edit by Morville O'Driscoll on 20th December 2012 4:57pm

A solution could be that the Steam box comes with some sort of DRM chip that would prevent running non legid games on it, exactly as on other consoles. In that case the publishers would have a much higher level of security and might accept to push their major games day1 on Steam boxes only... and not on the "open" Steam itself.
That would prompt players to get a Steam box instead of a generic PC to do the same and at the same time let publishers propose PC games on a much more secure market.
The very positive side is that you then could create PC games that are not "always connected" or "server based" without the certainty of massive piracy, like it is the case right now. As a player and a designer, I would love it. No more "useless" multiplayer mode or server tech (Diablo 3 anyone?) just to fight piracy and not for the sake of a better experience.
And, yes, nearly every hardware can and will be hacked, but it's not the same at all as a totally open format from start.

1) have shitty (or NO) broadband
2) don't want a digital-only games system (which will be useless anyway if you need to always be online to play but happen to be in the first category)
3) don't want to deal with ANY sort of DRM, no matter how perfect it is?

I like Renaud's "DRM chip" idea (that would make the thing at least palatable to those who never trust it, but we're heading into a dangerous divide of "haves" and "have nots" because there are still too many areas across the globe where anything resembling reliable and inexpensive high-speed connections is a pipe dream.

Sure, the industry needs a kick in the balls in terms of the current console model, but NOT at the cost of losing many potential paying customers who may WANT these new digital devices, but can't get them for reasons that aren't their fault. If the industry just writes them all off and thinks it's going to survive over the long term, that's a bad case of blinders on and lemming-like cliff-storming, full steam ahead (er, no pun intended)...

1) have shitty (or NO) broadband
2) don't want a digital-only games system (which will be useless anyway if you need to always be online to play but happen to be in the first category)

Steamworks. Every game that uses Steamworks (and even some which don't, like Dark Souls) can be activated on Steam using a serial key. So, in this sense, a Steambox would just be like PC gaming is already, for those who are smart. Buy a cheap retail disc off of Amazon, register it on Steam, install off disc, then update over the internet. Yes, the last stage hurts those without a decent net connection, but the only way to circumvent that is to never release patches or updates for any game, ever. For those who have super-fast internet, you can just sell serials over the counter, like WoW timecards.

3) don't want to deal with ANY sort of DRM, no matter how perfect it is?

Yeaaaahhhh. The problem with this consumer group is that it is largely ignored by publishers. It's not that people want DRM, it's that publishers say "Oh, look, PC is full of piracy [totally ignoring the same could be said of the 360 market]. Since there's so many dirty pirates, we'll just ignore PC gaming, or release PC games after consoles, so that we offset the losses in PC piracy by having more console sales".

Edited 3 times. Last edit by Morville O'Driscoll on 20th December 2012 6:33pm

GameStop has plans in place already to sell things like Steam gift cards, but it's also planning its own digital distribution service to compete against Steam.

"Impulse is a digital distribution and multiplayer platform. Originally developed by Stardock to succeed Stardock Central, it was purchased by GameStop in March 2011,[2][3] and was subsequently rebranded as GameStop App."

I don't see why any "hardcore gamer" would ever buy something like this, just buying a PC would offer you so much more value for money. I could see "casual gamers" picking one up but the price would have to be low, sub £200.

1) have shitty (or NO) broadband
2) don't want a digital-only games system (which will be useless anyway if you need to always be online to play but happen to be in the first category)

Steamworks. Every game that uses Steamworks (and even some which don't, like Dark Souls) can be activated on Steam using a serial key. So, in this sense, a Steambox would just be like PC gaming is already, for those who are smart. Buy a cheap retail disc off of Amazon, register it on Steam, install off disc, then update over the internet. Yes, the last stage hurts those without a decent net connection, but the only way to circumvent that is to never release patches or updates for any game, ever. For those who have super-fast internet, you can just sell serials over the counter, like WoW timecards.

Yup, I know about Steamworks. I'd actually chopped out the paragraph about it being a great solution... unless you live in an area where all that stuff couldn't be done.

As you noted about my third comment, this segment of gamers is indeed largely ignored (and under-counted) and until some sort of practical solution comes up, it's all money not being spent the way game companies want it to be spent (as opposed to how the consumer WANTS to spend it, which is how it should be).

This is a problem that's more the fault of enforced evolution over common sense solutions to a rather simple problem, I'd say. Everyone wants to gloss it over and puff out their collective chests about how great each new device is. But the fact is those shiny tech toys are leaving people out of the loop and relying on everyone upgrading to the next big thing at the same time. People still buy DVDs by the ton because they're cheap, still work on a bunch of home and portable players and yep, not everyone has a Blu-Ray player (nor a HDTV in some cases).

As I live in an area where a good deal of people aren't on high speed connections, I'm a front line correspondent of sorts. People either can't afford high speed service, get hit with data caps that would actually force them to game LESS (which is kind of freedom limiting if you think about it) or if they can get service, have to pay too much for "features" they don't want or need thanks to bundling by cable or phone companies. Sure, many would love to move into the 21st century like the rest of you, but that's not possible and some feel they're being forgotten as new consoles and devices arrive with functions they don't even care about.

I can see a "steambox" being disruptive to the curent industry status quo, however there are still many questions in need of an answer. Will it be cheap enough? Will it have satisfactory compatibility with the existing Steam library? Will it have exclusive (not released on other consoles) games? Will the hardware be a match to next-gen systems? What will the controller be like?

If Valve manages to tackle these issues effectively, they can cause serious headaches to Microsoft and Sony, assuming of course that they'll gather support from companies such as Intel, Nvidia and PC OEMs.

Edited 1 times. Last edit by Alexandros Gekas on 20th December 2012 9:24pm

This sounds fantastic.
Maybe Valve will knock some sense into the console runners. They're getting stale and exceedingly annoying with their silly gimmicks for the casual gamers. Business ethics is just something that's lost on most big companies.
I find Valve to be going back to what gaming is really about, and sticking with it.
Focus on the games and what gamers want. Not what makes the most money.
First and foremost of business; your primary concern is not the money coming in, but the service you provide.

When all the other big names figure this out, they'll start seeing a positive shift in their sales.

I don't think a Steambox will be any more of a threat to consoles than PC's are. They each have their own market with a fair amount of overlap but theres plenty of room for all of them to be successful on their own terms.

A few other thoughts on the Steambox:
- One of its biggest assets will surely be the quantity and quality of AA thru to Indie games that it has available. This may put more pressure to Microsoft and Sony to improve their arcade game offerings on next-gen consoles which can only be good.
- The biggest challenge to be addressed is Valve must ensure that Steam/Linux has as many games as possible. If it only has the fraction of the games that Steam/Mac has that will be a poor proposition for buying a whole 'console'.
- There is a possibility that this could result in the start of loose PC 'generation' target specs that developers could work towards (eg Steambox 1 equiv required: 8GB ram, AMD radeon X, core i5 etc). If this did happen it would surely be addressing one of PC's biggest weaknesses and be a benefit to both consumers and developers.

Microsoft could be kicking themselves, especially if Valve manager to bridge the gap between PC and console better than they did with the Xbox. Rather than just trying to beat consoles at their own game, Steambox could potentially expand the PC to an even bigger gaming audience AND take on console gaming...

Edited 1 times. Last edit by Adam Campbell on 20th December 2012 11:33pm

It's funny that nobody has mentioned this, but has anyone considered how a Steambox would even work? If Valve are trying to sell it as a PC alternative, then it will HAVE to run Windows or WINE or something that can munch on new and old DirectX code. This pretty much flushes Linux down the loo, or alternatively, makes Steambox into a console no different from an Xbox in the sense that it must be another IDE target and cost developer hours to port from Steam on Windows, while I doubt they would do as it would throw away all the selling points of Steam's massive back catalog of games.

If it has to run Windows, unless they can strike a deal with Redmond and get a WinCE with DX11 or something (which is virtually impossible seeing as they will be building a competing product to Xbox) then Steambox won't be able to do what it says on the tin and run all the steam games.

PS: Even if these stop being issues, it's not a PC until I can take parts out and replace them, I would personally prefer it if Steam made an OS to this effect as I really don't see them making a 'modular' console that allows you to swap out parts, although that does sound really cool which I think about it.

Edited 1 times. Last edit by Andrew Ihegbu on 21st December 2012 2:30am

Licensing Windows just won't work - and if it does, its no different from a "Xbox TV", or any device that runs Windows and can hook into a PC. Nothing new there.

Which probably leaves Linux - unless they want to pursue a Android-like Chrome-OS style thing... or they have a new OS in the works.

Linux makes the most sense, as its effectively license-free ... and reduces the cost of the box. Then its competing against devices like Ouya. But anything non-Windows seriously damages the available catalog.

What else could do they do? Develop a "Windows-compatible" OS that works for most games, uses the Windows/Direct-X API... but isn't Windows? Unlikely. But Steam have a lot of money and resources, so who knows what they have been working on really.

I think a lot of Publishers would be happy if the OS on steam box is Linux. Microsoft is goning the way apple goes with Windows 8.
You have to licens your software to the shop and MIcrosoft gets a % of the monye from every copy you sell. With nearly no control of your product when its in the shop.

Valve on the other hand givs you the acces to the best online distribution for core gaming customers with 3-5 M customers online every day.
On top f that the publisher has full acces to ther product and pay less license fees.

The customer can play steam box or on PC has one library with an acceptet drm system and a big community.

Im not a big fan of steam thy are not the good company in fakt to me thy are like microsoft and apple not good for cutosumers.
It looks like steam box is a good product if you want to make monye. Also we sould not forget how easy it is to make the steam box a multimedia box.

Edited 1 times. Last edit by Stephan Schwabe on 21st December 2012 9:47am

Yes, the OS question is effectively a very interesting one...
Windows, with the Win8 shop move is kind of out of question and Linux is like loosing 90% of their catalogue, present and future.
Studios crafting games right now do consoles and PC versions but the PC versions are Win/DirectX in facts, very rarely do you have a workable Linux build. Chrome OS seems even less workable. Would they stick to a strip down version of Win7??.

Their last moves suggest Linux, but that would really limit the game offer, something like Unreal (even 4) doesn't support it and Cryengine neither.

The latter, easily. Games /code/ doesn't touch most of the hardware very much at all, with the compiler taking care of the underlying processor architecture, memory manager and etc. In terms of refactoring and typing stuff in, it bascially comes down to Direct X vs Open GL source for the graphics stuff, everything else is small beer.

A naive port from one to the other would take some time, but if your DX game is really pushing things hard, then there'll be optimisations to unpick and then redo in the new GL evironment. Existing X360 or PS3 titles will be using a lot of these tricks.

Intruiged to see what Valve could do with this.
I'd expect to see an easy, streamlined experieence that you usually get with a console (I mean, put the disc in and it WORKS) and also a genuinely consumer-beneficial pricing system.
Microsoft are notoriously stingy with their points and sales. They give you a birthday present each year worth the equivalent of about 17p got being loyal!!
Steam sales on games and DLC would be amazing on a console.

I personally prefer to sit with a controller and play on my dedicated machine and only use steam for pc exclusives or ridiculous bargains i can't say no to! So this could be good!

With the innards of the ps4, 720 and steambox using off the shelf components (probably amd apus + amd graphics) there will not be much to differentiated spec wise but valve could kill them with game price and access to the biggest back catalogue in the world. Good luck valve!